1
00:00:00,000 --> 00:00:02,400
Speaker 1: But let's get to Peter McGuire who joins us. Peter

2
00:00:02,560 --> 00:00:05,560
Speaker 1: is the CEO of x M Australia. On the line

3
00:00:05,600 --> 00:00:08,160
Speaker 1: from Sydney. I don't know where to begin. We had

4
00:00:08,160 --> 00:00:11,400
Speaker 1: the ECO data for Japan that was a little above forecast,

5
00:00:11,920 --> 00:00:15,200
Speaker 1: but perhaps more compelling is what we're hearing now from

6
00:00:15,200 --> 00:00:17,720
Speaker 1: New Zealand. A forecast that recession will begin in the

7
00:00:17,760 --> 00:00:20,200
Speaker 1: second quarter of next year and the rb n Z

8
00:00:20,520 --> 00:00:24,080
Speaker 1: expecting it to be mild and despite that it's going

9
00:00:24,120 --> 00:00:27,440
Speaker 1: to continue to hike. Um. You think that's the right

10
00:00:27,440 --> 00:00:31,320
Speaker 1: step at this point, Well, good morning, Doug. I think

11
00:00:31,520 --> 00:00:34,240
Speaker 1: in gratings from Sydney, yes, probably is the right step.

12
00:00:35,159 --> 00:00:38,120
Speaker 1: I think that the overall theme across New Zealand it's

13
00:00:38,159 --> 00:00:42,720
Speaker 1: a fast, smaller economy than now than in Australia, and

14
00:00:43,200 --> 00:00:45,680
Speaker 1: they've really taken the bull by the horns and try

15
00:00:45,720 --> 00:00:48,920
Speaker 1: and rain in inflation. They've been quite aggressive with rape

16
00:00:49,000 --> 00:00:52,440
Speaker 1: rises as we all well know, and they're further along

17
00:00:52,440 --> 00:00:55,560
Speaker 1: the curve than what Australia is. So yes, probably the

18
00:00:55,920 --> 00:00:58,600
Speaker 1: trade off is going to be second quarter recession, let's

19
00:00:58,640 --> 00:01:00,600
Speaker 1: say how deep it is, and let's where the world

20
00:01:00,720 --> 00:01:05,480
Speaker 1: is by this time, maybe mid year it's it's interesting.

21
00:01:05,560 --> 00:01:09,120
Speaker 1: I mean the whole I suppose hardening of monetary policy

22
00:01:09,200 --> 00:01:11,360
Speaker 1: took place in New Zealand, that they were the first

23
00:01:11,360 --> 00:01:14,039
Speaker 1: bank to really move on in fleation. Now, tell me

24
00:01:14,080 --> 00:01:18,560
Speaker 1: something is it's almost acting like a Canarian a cool mate. Well,

25
00:01:18,600 --> 00:01:20,880
Speaker 1: in some ways, watched it is because you know they've

26
00:01:20,880 --> 00:01:23,920
Speaker 1: been We watched them because you know, I'm telling a

27
00:01:23,920 --> 00:01:27,280
Speaker 1: two hour flight. The big population base in Australia and

28
00:01:27,319 --> 00:01:30,000
Speaker 1: certainly in Sydney that are New Zealanders. And you talk

29
00:01:30,080 --> 00:01:31,640
Speaker 1: to the man and the woman on the street there,

30
00:01:31,800 --> 00:01:33,760
Speaker 1: you know New Zealanders, and they say, well, look they're

31
00:01:33,760 --> 00:01:36,680
Speaker 1: really hurting at home and they're raising rates. We understand

32
00:01:36,720 --> 00:01:39,480
Speaker 1: what happened to the property market over there and the

33
00:01:39,640 --> 00:01:42,720
Speaker 1: overall I think health of the economy has taken a

34
00:01:42,760 --> 00:01:45,880
Speaker 1: bit of a backward seat. So yeah, it was fairly aggressive.

35
00:01:46,160 --> 00:01:50,600
Speaker 1: And the realization is where are they and how deep

36
00:01:50,680 --> 00:01:52,840
Speaker 1: is it going to be? Because you've got property prices

37
00:01:52,920 --> 00:01:55,600
Speaker 1: really starting to come under the whip. So I can

38
00:01:55,720 --> 00:01:58,240
Speaker 1: understand if a central bank feels as though they need

39
00:01:58,280 --> 00:02:02,360
Speaker 1: to keep rates higher for longer because inflation, the risk

40
00:02:02,440 --> 00:02:04,720
Speaker 1: here is that it would rear its ugly head again.

41
00:02:04,800 --> 00:02:07,360
Speaker 1: So to speak. But are you confident with the notion

42
00:02:07,400 --> 00:02:10,160
Speaker 1: that we have reached peak inflation right now and that

43
00:02:10,200 --> 00:02:14,000
Speaker 1: we're seeing a pretty good moderation. I mean, I'm thinking

44
00:02:14,000 --> 00:02:16,640
Speaker 1: of the CPI report here in the States in particular.

45
00:02:17,760 --> 00:02:20,520
Speaker 1: I probably have to go back to my school professor

46
00:02:20,600 --> 00:02:24,440
Speaker 1: Jeremy Siegel and see what he thinks, because I really feel,

47
00:02:25,120 --> 00:02:28,320
Speaker 1: Professor Siegel, let's say, maybe you haven't reached it, and

48
00:02:28,720 --> 00:02:31,040
Speaker 1: I think that possibly twenty three is going to be

49
00:02:31,080 --> 00:02:34,400
Speaker 1: a pretty tough year from an inflation side. So Doug, No,

50
00:02:34,560 --> 00:02:37,400
Speaker 1: I don't know whether we have reached it. Time will tell,

51
00:02:37,440 --> 00:02:39,320
Speaker 1: and it'd be It's a lot easier to look back

52
00:02:39,360 --> 00:02:42,640
Speaker 1: in a vision mirror than forward looking because there's just

53
00:02:42,720 --> 00:02:44,800
Speaker 1: so many inputs that need to be considered. And I'm

54
00:02:44,840 --> 00:02:47,320
Speaker 1: worried about the price of crude. I'm worried about what

55
00:02:47,440 --> 00:02:51,840
Speaker 1: happens as far as currency wars and the overall bond market.

56
00:02:51,960 --> 00:02:54,720
Speaker 1: So yeah, I think crude that worries me a lot.

57
00:02:54,760 --> 00:02:58,360
Speaker 1: With energy prices starting to really um come under a

58
00:02:58,360 --> 00:03:02,160
Speaker 1: bit more pressure to the upside, yeah, this is it.

59
00:03:02,200 --> 00:03:05,440
Speaker 1: But I mean, you know, again, Australia and New Zealand

60
00:03:05,440 --> 00:03:07,760
Speaker 1: are in the same kind of position as the US.

61
00:03:07,880 --> 00:03:11,880
Speaker 1: We've got inflation, but again we've got this really, really

62
00:03:11,919 --> 00:03:15,400
Speaker 1: stubbornly strong jobs market. What do you make of it?

63
00:03:15,440 --> 00:03:19,480
Speaker 1: And why why? Well, you know, we're in Australia and

64
00:03:19,480 --> 00:03:21,760
Speaker 1: I've gon only I haven't traveled for three years, so

65
00:03:22,160 --> 00:03:24,919
Speaker 1: I look at Sydney and we've had a critical shortage

66
00:03:24,919 --> 00:03:26,680
Speaker 1: as far as people. So you go into a little

67
00:03:26,680 --> 00:03:29,079
Speaker 1: cafe and they say, please take your time because we

68
00:03:29,120 --> 00:03:32,600
Speaker 1: haven't got we need five stuff. I'm living here and

69
00:03:32,639 --> 00:03:34,560
Speaker 1: they've they've only got three. So we've got to be

70
00:03:34,560 --> 00:03:36,720
Speaker 1: conscious of that. And we're starting to now fill out

71
00:03:38,320 --> 00:03:41,480
Speaker 1: our shore is up with tourists and travelers, but we

72
00:03:41,600 --> 00:03:44,040
Speaker 1: had a real shortage as far as workers, and that

73
00:03:44,120 --> 00:03:47,440
Speaker 1: seems to be a common occurrence with this COVID situation,

74
00:03:47,560 --> 00:03:50,560
Speaker 1: restricted tourists to go to the likes of New Zealand

75
00:03:50,560 --> 00:03:54,800
Speaker 1: and certainly Australia, and that impacts the employment market, Rishi.

76
00:03:54,800 --> 00:03:57,680
Speaker 1: And that's where we deal with speaking of the covered

77
00:03:57,760 --> 00:04:01,200
Speaker 1: situation and nice segue into the China story here, Boy,

78
00:04:01,280 --> 00:04:03,520
Speaker 1: did we have we seen a pivot on the part

79
00:04:03,520 --> 00:04:06,440
Speaker 1: of Beijing to soften a lot of these restrictions and

80
00:04:06,480 --> 00:04:10,560
Speaker 1: it extends into Hong Kong as well. Does that necessarily

81
00:04:10,680 --> 00:04:13,400
Speaker 1: mean that that we're going to see the beginning of

82
00:04:13,400 --> 00:04:15,640
Speaker 1: a recovery in China? I get that it may be

83
00:04:15,840 --> 00:04:19,800
Speaker 1: slow and steady, but are we at an inflection point? Well?

84
00:04:19,839 --> 00:04:21,440
Speaker 1: I think we are in a lot of ways, and

85
00:04:21,520 --> 00:04:26,840
Speaker 1: quite simply because they were very very strict as far

86
00:04:26,880 --> 00:04:30,200
Speaker 1: as their compliance as we all know, and now by

87
00:04:30,279 --> 00:04:34,200
Speaker 1: backing off, and I think opens up from a tour prospective,

88
00:04:34,320 --> 00:04:38,560
Speaker 1: opens up from a trade perspective, and certainly Hong Kong

89
00:04:38,600 --> 00:04:43,320
Speaker 1: becomes possibly another destination point for travelers. And I don't

90
00:04:43,320 --> 00:04:45,479
Speaker 1: think that's going to be a bad thing. So yes,

91
00:04:45,520 --> 00:04:47,719
Speaker 1: I think twenty three is going to be a stronger

92
00:04:47,800 --> 00:04:51,280
Speaker 1: year for both of those economies. And that's not going

93
00:04:51,320 --> 00:04:55,880
Speaker 1: to not going to hurt anyone as far as supply

94
00:04:56,080 --> 00:05:00,640
Speaker 1: chains and the overall you know economic can in both

95
00:05:00,680 --> 00:05:04,800
Speaker 1: of those Well, the one country really isn't okay, I

96
00:05:04,920 --> 00:05:07,880
Speaker 1: just an interview here actually is do what we have

97
00:05:07,960 --> 00:05:11,320
Speaker 1: Peter in terms of efcs and looking at the dollar,

98
00:05:11,440 --> 00:05:14,000
Speaker 1: which is probably erased half of the games that has

99
00:05:14,040 --> 00:05:17,720
Speaker 1: had through this year in recent weeks, is that also done?

100
00:05:17,760 --> 00:05:19,640
Speaker 1: What do you see for it next year? How does

101
00:05:19,680 --> 00:05:22,240
Speaker 1: the Aussie how does some of the majors perform against it,

102
00:05:22,279 --> 00:05:25,240
Speaker 1: and do we see the yend coming back? Well, we're

103
00:05:25,240 --> 00:05:27,120
Speaker 1: still going to end. I mean, I've had an amazing

104
00:05:27,160 --> 00:05:28,600
Speaker 1: move and I'll start with that one. We were at

105
00:05:28,600 --> 00:05:31,320
Speaker 1: nearly one. I think we did touch one fifty and

106
00:05:31,360 --> 00:05:33,840
Speaker 1: that intervention numerous times. We're now at one thirty five

107
00:05:33,880 --> 00:05:36,480
Speaker 1: and a half, so that the yen is really strengthened

108
00:05:36,560 --> 00:05:39,039
Speaker 1: dramatically against that US dollar. We've got the US Dollar

109
00:05:39,120 --> 00:05:41,919
Speaker 1: index running at one oh four. Now I think that

110
00:05:41,960 --> 00:05:44,640
Speaker 1: there's further pressure to the downside because this week you've

111
00:05:44,680 --> 00:05:47,960
Speaker 1: got so many different markets looking at central bank raising

112
00:05:48,279 --> 00:05:50,720
Speaker 1: rising and you've got great decisions u k. As we know,

113
00:05:51,040 --> 00:05:54,440
Speaker 1: we've got Mexico, Norway, Philippines and got Switzerland which I

114
00:05:54,480 --> 00:05:58,240
Speaker 1: won't be surprised to probably nudge it up. And Taiwan's

115
00:05:58,279 --> 00:06:00,880
Speaker 1: now that's all tomorrow. So that's going to be further pressure.

116
00:06:00,880 --> 00:06:02,880
Speaker 1: And maybe the good news has already been baked in

117
00:06:02,960 --> 00:06:05,800
Speaker 1: for US dollar index the fifty basis points, so you

118
00:06:05,839 --> 00:06:09,400
Speaker 1: could see a one oh three by Christmas. And yes,

119
00:06:09,600 --> 00:06:13,800
Speaker 1: stronger dollar, stronger yen, pound and euro. So give me

120
00:06:13,839 --> 00:06:17,520
Speaker 1: a trading strategy that you think has legs and as

121
00:06:17,640 --> 00:06:20,200
Speaker 1: some strength going into the new year. We'll take it

122
00:06:20,240 --> 00:06:24,400
Speaker 1: out six to nine months from now. Well, I won't

123
00:06:24,400 --> 00:06:27,520
Speaker 1: be surprised. Depends on how aggressive effect her power is

124
00:06:27,560 --> 00:06:29,840
Speaker 1: going to be over the first couple of months. And

125
00:06:29,880 --> 00:06:32,479
Speaker 1: if they go back to twenty five basis point hikes

126
00:06:32,800 --> 00:06:35,440
Speaker 1: come February or March, then I think that that's going

127
00:06:35,480 --> 00:06:37,920
Speaker 1: to be a good sign. And then the other so

128
00:06:38,000 --> 00:06:40,760
Speaker 1: I think there will more structural weakness for US dollar

129
00:06:41,320 --> 00:06:44,400
Speaker 1: and you'd have to look at possibly gold. Have a

130
00:06:44,440 --> 00:06:46,240
Speaker 1: look where we are as far as some of these

131
00:06:46,240 --> 00:06:49,200
Speaker 1: currencies moving further to the upside, Maybe a one thirty

132
00:06:49,240 --> 00:06:52,679
Speaker 1: handle for yen is something to look at. And ero

133
00:06:52,880 --> 00:06:55,440
Speaker 1: the way it's going, they'll be aggressive with rape rises

134
00:06:55,480 --> 00:06:57,080
Speaker 1: over there, so maybe you're going to look at a

135
00:06:57,160 --> 00:07:00,960
Speaker 1: one point one. We're it's had a amazing move. All

136
00:07:01,000 --> 00:07:03,400
Speaker 1: of these currencies have been incredible to trade over the

137
00:07:03,480 --> 00:07:07,000
Speaker 1: last six to eight weeks. Well, this is it, isn't it?

138
00:07:07,080 --> 00:07:10,679
Speaker 1: And you know a point being here is this something

139
00:07:10,720 --> 00:07:14,560
Speaker 1: which will perhaps also again in places outside of the US,

140
00:07:14,720 --> 00:07:18,040
Speaker 1: mean that we'll have the Sorry, the central banks have

141
00:07:18,080 --> 00:07:20,440
Speaker 1: less to do to fight inflation because it wouldn't be

142
00:07:21,240 --> 00:07:23,960
Speaker 1: as virulent as it has been because things are generally

143
00:07:24,000 --> 00:07:27,320
Speaker 1: praised and dollars well, I think so yeah, And I

144
00:07:27,320 --> 00:07:29,480
Speaker 1: think twenty two was the year for blast off. And

145
00:07:29,760 --> 00:07:31,720
Speaker 1: as you mentioned earlier, you know in New Zealand really

146
00:07:31,760 --> 00:07:33,600
Speaker 1: hit the ball out of the park and all everyone's

147
00:07:33,880 --> 00:07:37,400
Speaker 1: playing cash up. So I think the majority of the

148
00:07:36,680 --> 00:07:42,880
Speaker 1: rises of interest rates across most markets will have happened

149
00:07:42,880 --> 00:07:46,920
Speaker 1: by probably end of January February, and we could see

150
00:07:46,920 --> 00:07:55,400
Speaker 1: a less unless um. I suppose aggressive central bank policy globally,

151
00:07:56,240 --> 00:07:58,960
Speaker 1: but that's not the same thing as saying that we're

152
00:07:59,000 --> 00:08:02,040
Speaker 1: going to enter a new paradigm where raid cuts are

153
00:08:02,120 --> 00:08:04,400
Speaker 1: beginning to happen. Now, I think they'll stay elevated for

154
00:08:04,440 --> 00:08:07,800
Speaker 1: a while until they feel confident that inflation is back

155
00:08:07,840 --> 00:08:11,800
Speaker 1: in the box. Peter McGuire from x M Australia, thanks

156
00:08:11,800 --> 00:08:13,440
Speaker 1: so much for joining us here on d b A.

157
00:08:13,800 --> 00:08:14,640
Speaker 1: This is Bloomberg